Infosys Q4 results: Profit up 7.8%; Rs 17.50 dividend announced; FY24 guidance, attrition & other key takeaways

Infosys, the second largest IT firm by sales, on Thursday reported a 7.8 per cent year-on-year (YoY) rise in consolidated net profit at Rs 6,128 crore for the March quarter compared with Rs 5,686 crore in the same quarter last year. Analysts were expecting a profit growth of 15 per cent.

The Salil Parekh-led IT firm reported a 16 per cent YoY jump in consolidated sales at Rs 37,441 crore compared with Rs 32,276 crore in the same quarter last year. Analysts were expecting sales growth for the Bengaluru-based technology major at 20 per cent. Dollar revenue for the quarter came in at $4,554 million, down 2.2 per cent QoQ. In constant currency terms, revenue de-grew 3.2 per cent on a sequential basis. Digital revenues accounted for at 62.9 per cent of total revenues, Infosys said in a BSE filing.

Infosys has guided for 4-7 per cent revenue growth in constant currency (CC) and 20-22 per cent Ebit margin for the financial year. Analysts were expecting a 5-8 per cent CC revenue growth guidance and 21-23 per cent Ebit margin guidance for the fiscal year.

The IT major said its operating profit for the quarter stood at 21 per cent, down 50 basis points on both YoY and QoQ basis.

Sanjeev Hota, Head of Research at Sharekhan said Infosys delivered a surprisingly weak set of numbers for Q4 and missed its and Street estimates on all multiple fronts on the back of unplanned project rammed down and cancellation across the sectors.

"Revenues fall on constant currency basis was worse than sequential decline seen at the peak of Covid-19 crises. Also FY24 guidance seems to be modest and below our expectations both on revenues and margins. Further TCV wins at $ 2.1 billion for the quarter was weak, down 36 per cent QoQ and 9 per cent YoY. Management commentary does not inspire confidence on business outlook amid uncertain demand environment. We expect stock to witness weakness and underperform in near term,” Hota said.

Infosys, which announced a a final dividend of Rs 17.50 per share, said it won orders worth $2.1 billion in the March quarter, taking its FY23 order wins to $9.8 billion. The record date for the dividend payment is June 2.

CEO and MD Salil Parekh said: “Our strong performance in FY23 is a testimony to the continued focus on digital, cloud and automation capabilities which resonated with our clients. We have launched exciting programs with our clients leveraging generative AI platforms.”

As the environment has changed, Parekh said, his company sees strong interest from clients for efficiency, cost and consolidation opportunities, resulting in a strong large deal pipeline.

"We have expanded our internal program on efficiency and cost to build a path to higher margins in the medium term. We continue to invest in our people and in supporting our clients”, he added.

Attrition rate for the quarter fell to 20.9 per cent in the March quarter compared with 24.3 per cent in December and 27.7 per cent.

The leadership team of the Bengaluru-based IT major would host a press conference at 4:30 pm today. The participating executives would address questions from the media during this interaction, which would be streamed live on the 'Investor Relations' section of Infosys website. It will later be archived and available after 6:30 pm today.

Infosys would also conduct a 60-minute conference call at 6 pm IST, where the senior management will discuss the company's performance and answer questions from participants. The event will be webcast live on the Investor Relations section of Infosys website, following which it would be archived here. The archive would be available after 8 pm.

Shares of Infosys closed the day at Rs 1388.60, down 2.79 per cent. The average target for the stock stood at Rs 1,720 ahead of its quarterly results. Data showed Infosys shares traded at 20 times 1-year forward PE multiple, a 3 per cent discount to Nifty IT index. In the last 16 years, the Infosys stock has traded at 5 per cent premium to Nifty IT index.

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